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CIA Part 1 Study Unit 4: Control: Types and Techniques
Terms in this set (44)
Any action taken by management, the board, and other parties to man age risk and increase the likelihood that established objectives and goals will be achieved. Management plans, organizes, and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.
Policies, procedures, and activities that are part of a control framework, designed and operated to ensure that risks are contained within the level that an organization is willing to accept.
Requires feedback on the results of organizational activities.
Control Process includes:
- Establishing standards
- Measuring performance against the standards
- Examining and analyzing deviations
- Taking corrective action
- Reappraising the standards based on experience
- Policy and procedure manuals
- Employee training
- Job descriptions
Deter the occurrence of unwanted events
Alert the proper people after an unwanted event.
Effective before material harm occurs.
Correct the negative effects of unwanted events.
Reduce risk when the primary controls are ineffective.
Work with other controls to reduce risk to an acceptable level .
Primary controls that relates to the business tasks performed by a particular system.
- Input Controls
- Processing Controls
- Output Controls
- Batch Input control
- Online Input control
Batch input control
- Financial totals
- Record counts
- Hash totals
Online input controls
- Preformatting of data entry screens
- Field checks
- Validity checks
- Limit and range checks
- Self-checking digits
Ensure that data are complete and accurate during updating
Ensure that processing results are complete, accurate and properly distributed.
Report information about completed activities
Improve future performance by learning from past mistakes.
Adjust ongoing processes.
Monitor activities in the present to prevent them from deviating too far from standards.
Anticipate and prevent problems. Require a long-term perspective.
Should be based on relevant established accounting principles.
Objectives of financial controls
- Proper authorization
- Appropriate record-keeping
- Safeguarding of assets
- Compliance with laws, regulations, and contracts
Apply to production and support activities.
Should be based on management principles and methods.
Dependent on the intervention of humans for proper operation.
Executed whenever needed with no human intervention.
Graphical representations of the step-by-step progression of information
Allows the internal auditor to analyze a system and to identify the strengths and weaknesses of internal controls and the appropriate areas of audit emphasis.
Depict areas of responsibility arranged across the page in vertical columns.
- Present successive steps in a top-to-bottom format
- Depict specific actions carried out by a computer program.
Data Flow Diagrams
Show how data flow to, from, and within an information system and the processes that manipulate the data.
A simple form of flowcharting used to depict a client process.
Should reduce the risk of errors and prevent an individual from perpetuating and concealing fraud.
Segregation of duties
Management control techniques
Tone at the top
Board of Directors control techniques
- Selection of senior management
- Objective judgment, knowledge of the organizations industry
Internal Auditors control techniques
- Evaluate the soundness of the system of internal control
Other personnel control techniques
- Perform his or her appropriate control activities
- Inform those higher in the entity of poor control
- Traditional, mechanical approach
- Measure performance against standards and then takes corrective action through the individual responsible for the function or area being evaluated
- Evaluates the entire process of management and the functions performed
- Attempts to improve that process instead of simply correcting the specific performance of the manager. `
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